Executive: Support allows brokers to focus on ‘being an entrepreneur’
As the wholesale mortgage channel continues to grow, more brokers are making their way into the space each year.
Whether they decide to leave retail establishments for wholesale or begin their LO career in the channel, wholesale mortgage continues to expand rapidly.
While brokers appreciate the freedom that comes with being a wholesale mortgage broker, that doesn’t mean the adjustment is always smooth.
For those who start their own brokerage, the newfound freedom of wholesale mortgage comes with many back-office duties. Some brokers are deciding that doing it on their own might not be the right path.
That doesn’t mean that these brokers have to give up being in wholesale, however. A growing trend is for large wholesale companies to scoop up smaller, independent brokers to provide that back-office support. One executive said that’s a trend that likely will continue.
Anthony Casa (pictured top), president and CEO of UMortgage, said it’s one of the things they’re trying to help brokers work through.
“The solution that we're providing for the people who are considering this or jumping on board is like, people want to be a broker without starting a broker shop,” Casa told Mortgage Professional America. “I have been a small broker in the past. It's really hard to make the transition from being an LO or a branch manager working for a bank or a lender to starting your own broker shop.”
Back-office headaches
Casa said brokers are finding that being able to use a larger company for all of the human resources, technology, and additional support allows the brokers to do what they do best.
“You're not used to wearing the hats of compliance, HR, and technology, and all these things,” Casa said. “So what we've done is we've really allowed for these people to plug into our platform, get the technology, get the compliance, which is a really big deal, get the systems, and then you can be an entrepreneur. I truly believe that long term, this is where the market's going.”
By making these types of services available in the wholesale space, Casa said it keeps brokers from having to abandon wholesale for the support of the retail channel once again.
“I think what we're seeing is that 80% of the people who make the move from a retail lender or bank to the broker channel really want this type of platform,” he said. “And there are other platforms out there.
“I really do believe that a lot of people who have come over the last several years who have gone back have done so because it's not that the wholesale platform isn't a great platform to originate in, and it's not that it doesn't offer all the benefits that they thought it would. It's just they're not equipped to wear this many hats.”
Continued wholesale growth
Companies like UMortgage are offering more than just support to brokers interested in joining up with them. They’re also offering programs and incentives, like the flat-fee model and the corporate margin cap, which allows brokers to keep all their earnings once they exceed 50 units in their anniversary year.
What wholesale companies are doing is making it more enticing for retail brokers to jump into the wholesale space. Casa sees that trend continuing, as long as market conditions are right.
“I think there are market-specific components that do play a huge factor in this,” he said. “I think the only thing that could slow it down is if rates drop really quickly. I think everybody's going to get really busy, where changing companies or changing channels becomes unrealistic.”
The wholesale channel continues to evolve every year as it continues to expand. Casa has seen that firsthand, dating back to when he founded the Association of Independent Mortgage Experts (AIME). Now he can look back and see the foundational changes in the broker community.
“If you look at the time around when I started AIME back around 2017, the broker market share at that time was single digits,” Casa said. “Fast-forward to now, and it's over 25%. The broker channel from 2015 to now is like night and day, and it keeps getting better. When you work for a retail lender, they're just fulfilling your loans. There's no competition.
“You don't have optionality. I think that in all industries and all businesses, there’s a historical, foundational component of where complacency begins. I think that's a big reason why we've seen this trend.”
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